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How to compare money transfer fees

6 March 2017

With so many options to send money to someone, it’s easy to overpay. Find the best option for your needs.

Money transfers are a way to send money to nearly anyone on the planet, usually through online services or direct bank transfers. With so many services available, each has its own benefits and drawbacks.

How do banks and transfer services make money on transfers?

Banks and independent money transfer services charge fees per transfer. These fees can be a flat transfer fee — for example, $25 per transfer — or a percentage of the total amount you’re sending.

What fees should I look out for?

Depending on your bank or money transfer service, you could pay:

Margins on the exchange rate. For international transfers, banks and money transfer services typically skew the mid-market rate for a profit.

Incoming fees. Typically a bank fee for receiving money from another bank account.

Outgoing fees. Typically a bank fee for sending money to another bank account.

International fees. For sending or receiving money from an overseas bank account.

Fees by transfer amount. A percentage-based fee based on the amount of the transfer.

Fees by payment method. A fee based on how you’re paying for the transfer. For instance, some banks charge more if you pay at a branch (rather than online), and you’ll often pay higher fees if you pay by credit or debit card.

What is the mid-market rate?

The mid-market rate is what your money’s actually worth on the global market compared to another currency. It’s the midpoint between worldwide supply and demand for that currency — and the rate banks and transfer services use when they trade among themselves.

Use this rate as a baseline to compare against the rates provided by your bank or transfer service. With it, you’ll discover which companies offer the best rates.

How can I compare money transfer fees?

How much you’ll pay for a money transfer depends on where you’re sending it to, how you’re paying for it and:

Case study: Sending $1,000 to Australia

Lilli needs to send $1,000 to her host family in Sydney ahead of studying abroad. While she’s comfortable with the security and familiarity of her local Bank of America, where she holds an account, she decides to compare its rates and fees against a popular online money transfer service.

Here’s a breakdown of what Jessica could pay to transfer $1,000 to Australia.

Bank of America

Online money transfer service

Transfer fee

$35 (outgoing international fee)

$5

Exchange rate

1 USD = 1.28 AUD

1 USD = 1.32 AUD

Transfer method

Online deposit

Online deposit

Transfer speed

1–2 days

1–2 days

Total AUD received

1,280 AUD

1,320 AUD

Jessica’s learns that her bank not only charges an outrageously high transfer fee but also offers a weaker exchange rate. By going with a money transfer service like OFX or World First, Jessica could save $30 in fees and send 40 more Australian dollars to her host family — a lot more to help them in preparing for her stay.

Save money on your personal or business international money transfer today. Fill in the form and you’ll be contacted by a foreign exchange expert to have an obligation-free discussion about your options.

With over 17 years of foreign exchange expertise and over $100 billion transferred, OFX can help with all your currency exchange needs, including:

Frequently asked questions about money transfer fees

Can I use US dollars when I’m abroad?

Using US dollars abroad isn’t a great idea. Most businesses will charge a steep fee for accepting foreign currency, and some will not accept it at all. Learn how to compare exchange rates for the best deals.

Are traveler’s checks a good option for transferring currencies?

No. Many banks have stopped issuing traveler’s checks. With the surge in electronic payments and credit cards, finding a business to accept them overseas is getting more difficult. carry higher fees than alternate methods of currency transfer. If you do get your hands on them, you’ll typically pay heavy fees to cash them.

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